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Absolute levels of debt, increasingly poor risks, and asset price inflation turning into official inflation are all conspiring to end that cycle and, in all likelihood, reverse it, as borrowers deleverage and asset prices come down

Deleverage
A company's attempt to decrease its financial leverage. The best way for a company to delever is to immediately pay off any existing debt on its balance sheet. If it is unable to do this, the company will be in significant risk of defaulting.

Investopedia Says:
Companies will often take on excessive amounts of debt to initiate growth. However, using leverage substantially increases the riskiness of the firm. If leverage does not further growth as planned, the risk can become too much for the company to bear. In these situations, all the firm can do is delever by paying off debt.

Any sign of deleverage shown by a company is a red flag to investors who require growth in their companies.


Shouldn't it be "as borrowers delever", though?
by nanne (zwaerdenmaecker@gmail.com) on Mon Dec 10th, 2007 at 01:30:08 PM EST
[ Parent ]
Americano-finance-speak says "to leverage", and so, "to deleverage".
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Dec 10th, 2007 at 03:13:00 PM EST
[ Parent ]

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